Chapter 6 Practice Quiz
Chapter 6 Practice Quiz STS 2500
Popular in S&T in Social and Global Context
Popular in Engineering and Tech
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This 6 page Study Guide was uploaded by Annette Chun on Monday October 5, 2015. The Study Guide belongs to STS 2500 at University of Virginia taught by Douglas Muir in Summer 2015. Since its upload, it has received 200 views. For similar materials see S&T in Social and Global Context in Engineering and Tech at University of Virginia.
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Date Created: 10/05/15
Chapter 6 Small Business Entrv Pz s to FullTime Entrepreneurship 1 Which of the following is NOT a path to fulltime business ownership A Franchising B Stand retailing C Starting a new business D Buying an existing business 2 A legal agreement that allows a business to be operated using the name and business procedures of another firm is referred to as a A franchise B license C turnkey D consignment 3 Purchases of existing businesses may occur through in which the business is bought over a period of time with money earned from the business A turnkey B cash purchases C earnouts D leveraged buyouts 4 All of the following are advantages of a startup EXCEPT A the use of the most uptodate technologies B the access to revolving credit line C it can be kept small deliberately to limit the magnitude of possible losses D it has a clean slate 5 Which of the following is a disadvantage of a startup A It begins with a clean slate B Absence of quotlegacyquot locations buildings and equipment C Absence of initial name recognition D Providing new products or services 6 refers to something the business owns that has economic value or is expected to have economic value in the future A Asset B Revolving credit C Cash ow D Synergy 7 10 ll 12 An credit is a credit agreement that allows the borrower to pay all or part of the balance at any time as the loan balance is paid off it becomes available to be borrowed again A revolving B installment C social D nonrevolving credit The specific concept that leads to a startup business usually comes from the of the person starting the business A credentials B interests C education D experience A is an organization that provides financial technical and managerial help to startup businesses A business incubator B trade association C venture capital firm D consultancy In executive volunteers contribute their time and energy in assisting startup and struggling small businesses as a public service A mentoring programs B trade associations C business incubators D franchising When a small business startup secures outside investment one thing it accomplishes is that A the business is critically examined by outsiders B it brings the synergy from multiple founders C the business produces a product or service for Which there is a proven demand D the founders take part in the mentoring program The single greatest hurdle to a successful startup is A obtaining and maintaining mentoring relationships B obtaining and maintaining suf cient cash C hiring and retaining qualified employees D procuring enough inventory for sale 13 14 15 16 17 18 In which way will working with a partner reduce the risk of a startup A Banks prefer partnered startups B Federal government provides subsidies to partnering situations C Partners may provide capital equipment or advice D Partners eliminate the need to hire other employees Which of the following is an advantage of buying an existing business A It is easy to find an appropriate existing business for sale given the technology today B Purchasing a business often requires less cash outlay than for creating a startup C Existing managers and employees embrace change due to continuing operations that provide job security D New technology needs are eliminated Which of the following is a disadvantage of purchasing an existing business A Established customers leaving due to change B Existing business processes being difficult to change C Purchasing a business being significantly more expensive than a startup D Existing managers and employees resisting change Identify the statement that is not a part of the steps which make up the process of due diligence A Conducting extensive interviews with the sellers of the business B Making a personal examination of the site or sites of the business C Interviewing customers and suppliers of the business D Developing a brief business plan for the acquisition Financial statements in performing due diligence should include all of the following EXCEPT an A balance sheet B mission statement analysis C income statement D statement of cash ows analysis is based on the concept that the longer you have to wait to receive money the less valuable it is right now A Discounted cash flow B Replacement value cash ow C Free cash ow D Book value cash ow 19 20 21 22 23 Which of the following statements about asset valuation methods is false A Estimates do not consider the value of an ongoing firm over the value of its identifiable assets B They are based on the assumption that a business is worth the value of its assets minus the value of any liabilities C It is very difficult and time consuming to separately identify and estimate the values of all the assets of a business D The application of asset valuation methods to business valuation is similar to having an annuity All of the following are major problems With using book value EXCEPT A the original cost of an asset might bear no relation to its current value B depreciation is an arbitrary but nonsystematic method of transferring asset value to expense C internally developed assets such as patents trademarks and trade secrets do not have book value D Depreciation makes no attempt to measure actual loss of value of an asset The ratio of the value of a firm to its annual earnings is called A unappropriated profit B accumulated earnings C retained earnings D the earnings multiple are rules of thumb that are commonly used to estimate firm value in relation to some easily observable characteristic of the business A Synergies B Spinoffs C Book values D Heuristics Identify the statement that is not essential for an agreement to constitute a franchise A The agreement does not require the franchisee to pay a fee for the right to enter into the business B The agreement grants the franchisee use of a brand name trademark service mark logo or other commercial symbol Which designates the franchisee as an affiliate of the franchisor C The agreement provides that the franchisee may engage in business using a marketing plan or system provided by the franchisor or proposed by the franchisee D The agreement provides the franchisee With a legal right to engage in the business of offering selling or distributing goods or services 24 To avoid having the diversity of values goals and motivators from becoming the source of such intrafamily strife you and the other family business members should respect one another39s differences by all of the following ways EXCEPT A being certain that all family members know and accept that they are not forced to enter the management of the business if they don39t want to B providing each member of the family business with the opportunity to obtain education and experience outside the business C allowing each family member who does wish to enter the business to find out and do those functions and activities that he or she does best D assuming that the leadership of the business must come from within the family Scenario Tavanna Tucker Having owned several parttime businesses all her life Tavanna at 45 is considering a fulltime business ownership She is very confused about what approach to take in her business pursuit She has come to you for advice so now it is your turn in the quothot seatquot 25 26 27 28 29 Given that Tavanna has no inheritance possibility all of the following are other options you could offer her for fulltime business EXCEPT A buying a business B franchising C consignment business D starting a new business Which of the following would you offer Tavanna as an advantage for starting a new business A Initial name recognition B Clean slate C quotLegacyquot locations buildings and equipment D Accessibility to experienced managers and workers Based on what you have learned from this class which of the following should Tavanna NOT do to increase her chance of startup success A Getting a mentor B Securing outside investment C Building trust in her quotstoryquot D Starting her business without any other founders to avoid con ict If Tavanna were to buy an existing business which of the following disadvantages should you point out A Dif culty in determining the worth of the business B Possibility of established customers leaving due to change C Difficulty in changing existing business processes D Buying a business being more expensive than starting one Tavanna brought with her a franchise business packet She likes the idea but is unsure what might be its disadvantage A It is probably expensive and not profitable B You give up control of marketing and operations C You compete with the franchise company itself D You receive no training and
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